I don't get why it is a security problem that someone can manufacture false positives for an anti-virus. What is the benefit for a virus to have non-malicious code caught by the anti-virus? False negatives would be more of an issue if the anti-virus has white lists and one can manufacture a Microsoft Excel MD5 signature with a malware. But that's not what the article refers to. MD5 is only broken if you want to use i…
As you can see, binaries submitted for analysis are
identified by their MD5 sums and no sandboxed execution is
recorded if there is a duplicate (thus the shorter time
delay). This means that if I can create two files with the
same MD5 sum – one that behaves in a malicious way while the
other doesn’t – I can “poison” the database of the product
so that it won’t even try to analyze the malicious sample!
So it's a technique to get the scanner to ignore a malicious binary by constructing a non-malicious one with the same MD5 sum. This would be much harder if the scanner used a SHA-1 hash or similar.